Maselli to serve 27 months in federal prison

Former Senator Chris Maselli was sentenced to 27 months in federal prison last week after pleading guilty in November to eight counts of bank fraud. He must surrender to serve the sentence by 2 p.m. on Thursday, March 10.

The 38-year-old Maselli had requested a one-day sentence with five years of probation, highlighting that the fraud involved none of his legal clients and all of the loans were current.

Just Mary Lisi of the U.S. District Court, however, said the request “trivializes the massive fraud you engaged in,” according to the Associated Press.

The Johnston official, who stepped down from his Senate seat in the wake of the charges, falsified bank and federal tax documents in order to obtain more than $1.7 million in mortgages and loans. No plea agreement was entered between Maselli and the government.

At the time of Maselli’s guilty plea, Assistant U.S. Attorney Dulce Donovan told the court that beginning in June 2007 Maselli applied for a series of loans, primarily mortgage loans, from several federally-insured banks. In order to qualify for those loans, the defendant lied about his income and assets and produced fabricated documentation, including false tax returns and bank statements to support his misrepresentations regarding his income and assets. In all but one instance, the banks relied on the defendant’s false statements in approving him for the loans.

Assistant U.S. Attorney Donovan told the court that Maselli began his schemes in May 2007, when he and his wife signed a purchase and sale agreement to buy land and a home for $200,000. Maselli intended to demolish the existing structure and build a home. The defendant used his wife’s elderly grandmother as a straw borrower and applied for two mortgages in her name, totaling $200,000. The defendant’s wife’s grandmother was falsely told that she would be co-signing the loan with the defendant’s wife and that her name would be removed from the mortgage within three months of the purchase.

Instead, the loan applications Maselli submitted to the bank were submitted with the wife’s grandmother named as the sole applicant, and the loans were issued in her name only. In order to deceive the bank into thinking that his wife’s grandmother was the true purchaser of the property and the true borrower, Maselli created numerous false documents relating to his wife’s grandmother and submitted false information on the loan applications concerning the grandmother, her income and assets.

Maselli never removed the grandmother’s name from the mortgage, and a week after the closing the defendant completed a deed transfer that transferred her ownership in the property to him.

Donovan told the court that in each of the seven subsequent instances of applying for and obtaining mortgages and loans, the latest which was obtained in March 2009, Maselli lied about his income and assets. In each instance, the banks relied on the defendant’s false statements and false documents in approving the loans.

The matter was investigated by the Federal Bureau of Investigation, U.S. Department of Housing and Urban Development, Office of the Inspector General, and the Internal Revenue Service, Criminal Investigations.

After his prison sentence has been served, Maselli will have three years of supervised release.